How to Apply for an IPO in India: A Step-by-Step Guide

What applying for an IPO actually involves

To apply for an IPO in India, you need a demat account, a PAN card and a bank account you can use for ASBA or a UPI mandate. You then submit a bid through your broker, bank or the registrar’s platform, choosing a price within the announced band and a number of lots. Your money is blocked, not taken, until the company finalises allotment.

An IPO, or initial public offering, is when a private company sells shares to the public for the first time and lists them on a stock exchange. Retail investors apply during the subscription window, usually a few days. The process is standardised, but small errors can get a bid rejected, so it helps to know each step before you start.

Step 1: Get your accounts ready

Demat account

Shares you are allotted are credited to a demat account, so you cannot apply without one. Most brokers open one online with PAN, Aadhaar and bank details, and it usually takes a day or two after verification. If you already hold shares or mutual funds in demat form, you have one.

Bank account and UPI

Your bank account must be in your own name and linked to your PAN. For UPI-based applications, the UPI ID must also be linked to that same bank account. A mismatch between the applicant, the PAN and the bank account is one of the most common reasons a bid fails.

Check your KYC

Your Know Your Customer details should be current with your broker or bank, including your address and bank account. If your KYC is pending or your details are stale, fix that before the issue opens rather than during the last hour.

Step 2: Read the red herring prospectus

The red herring prospectus (RHP) is the document that describes the company, its business, financials, risks, the objects of the issue and the price band. You do not need to read every page, but look at the risk factors, how the company makes money, why it is raising funds, and whether existing shareholders are selling.

Also note the issue dates, the price band, the lot size and the minimum and maximum retail investment limits. These details decide how you fill the form.

Step 3: Understand lots, the price band and the categories

Bids are made in lots, not single shares. If the lot size is 50 shares and the price band is a range, the minimum bid is one lot at a price you choose within that band. You can bid for more lots, up to the maximum allowed for retail investors.

Term	What it means
Price band	The floor and cap price set for the issue; you bid at or between them.
Lot size	The smallest number of shares you can bid for.
Cut-off price	Agreeing to buy at whatever final issue price is set within the band. The amount blocked is based on the top of the band, and only retail and certain other small bidders can choose this option.
Retail category	Reserved portion for small investors, subject to a maximum application value.
ASBA	Application Supported by Blocked Amount: your funds stay in your bank, blocked, until allotment.

Retail applications are capped by value (currently ₹2 lakh per issue for retail individual investors), so check the limit in the RHP or on the exchange website before bidding. Bids paid through UPI can be up to ₹5 lakh. Bidding above the retail limit moves your application into a different category with different rules.

Step 4: Apply through ASBA or a UPI mandate

Using net banking or ASBA

Log in to your bank’s net banking or your broker’s platform, open the IPO section, select the issue and enter your bid price, quantity and demat details. The bank blocks the amount in your account. You will see an authorisation step, often an OTP, before the bid is registered.

IPO application through UPI

Many brokers and UPI apps let you apply with a UPI mandate. You enter your bid, and a mandate request appears in your UPI app. Approving it blocks the funds in your bank account. The mandate has a time limit, so approve it promptly; an unapproved mandate means no valid bid.

Either way, you can usually revise or cancel your bid before the issue closes. Check the application status on the registrar’s website or your broker’s app after submitting.

Step 5: Allotment and refunds

After the issue closes, the company and registrar finalise the basis of allotment. In the retail category, if the issue is oversubscribed, allotment is done by lottery, so applying does not guarantee shares. You can check your status on the registrar’s site or the exchange website.

If you are allotted shares, the blocked amount is debited and shares are credited to your demat account, usually before listing. If you get none, the block is released and the funds become available again in your bank account. If you applied for several lots and are allotted fewer, only the amount for the allotted shares is debited and the rest is released. Under SEBI’s T+3 timeline, mandatory since December 2023, allotment, unblocking of funds and credit of shares are usually done within two working days of the issue closing.

Step 6: Listing day

Shares begin trading on the exchange on the listing date, which under the T+3 timeline is usually the third working day after the issue closes. The price can open above or below the issue price, and it can move sharply in either direction. You can sell on listing day or hold, depending on your own plan. Remember that shares credited to your demat account may take a short time to reflect in your holdings, so check before you place a sell order.

Common mistakes and risks

• Name and bank mismatch: the applicant, PAN and bank account must belong to the same person.
• Missing the UPI mandate: an unapproved or expired mandate voids the bid.
• Bidding outside the band: a price above the cap or below the floor is rejected.
• Wrong lot size: bids must be in multiples of the lot.
• Multiple applications: applying more than once from the same PAN in the same category can get all your bids rejected.
• Assuming allotment: oversubscribed retail issues are allotted by lottery, not by who applied first.
• Ignoring the business: a heavily subscribed IPO is not automatically a good investment, and listing gains are not guaranteed.

IPO investing carries risk. The listing price can fall below the issue price, and newly listed shares can be volatile. Read the risk factors, decide based on your own goals, and never apply with money you may need soon.

A quick checklist before you bid

1. Demat account active, KYC current, bank account linked.
2. RHP read: business, risks, price band, lot size, retail limit.
3. Bid price and lot quantity decided.
4. ASBA or UPI mandate submitted and approved.
5. Application status checked after the issue closes.
6. Allotment and refund checked on the registrar’s website.